Moody’s view of pension bonds in line with Kansas rating

A major credit agency is rating $1 billion in bonds that Kansas hopes to sell to bolster its pension system for teachers and government works in line with the state’s existing rating.

Moody’s Investors Service this week assigned a rating of Aa3 to the bonds, which the state hopes to sell next month. That’s one notch below the Aa2 rating for Kansas and a standard decrease when a state’s legislature must appropriate money for annual bond payments.

The ratings agency also said its outlook for the bonds is stable.

The state pension system expects to earn significantly more from investing the funds raised by the bonds than the state will pay to retire the debt over 30 years. The state is limited to paying 5 percent interest to bond investors.